Harris Reaffirms

Harris (HRS) reported 1st Quarter September 2016 earnings of $1.39 per share on revenue of $1.8 billion. The consensus earnings estimate was $1.35 per share on revenue of $1.7 billion. Revenue fell 3.1% compared to the same quarter a year ago.

The company said it continues to expect fiscal 2017 earnings of $5.70 to $5.90 per share on revenue of $7.11 billion to $7.33 billion. The current consensus earnings estimate is $5.73 per share on revenue of $7.24 billion for the year ending June 30, 2017.

Harris Corporation together with its subsidiaries is a communications and information technology company serving government and commercial markets. It develops RF communications, integrated network solutions and government communications systems.

--Announced definitive agreement to sell the CapRock commercial business for $425 million

Harris Corporation (HRS) reported revenue in the first quarter of
fiscal 2017 of $1.75 billion compared with $1.81 billion in the prior
year, down 3 percent on a reported basis and 2 percent on an organic
basis, excluding prior-year revenue attributable to the divested
Aerostructures business. GAAP net income was $160 million, or $1.27 per
diluted share, compared with $148 million, or $1.18 per diluted share,
in the prior year. Non-GAAP net income, excluding acquisition-related
charges, was $175 million, or $1.39 per diluted share, compared with
$163 million, or $1.31 per diluted share, in the prior year. A
reconciliation of GAAP to non-GAAP financial measures is provided in the
tables.

"First quarter performance provided a solid start to our fiscal year,"
said William M. Brown, chairman, president and chief executive officer.
"Despite the revenue headwind, earnings were higher in the quarter as we
maintained our focus on operational excellence and realized acquisition
synergies while investing to meet the needs of our customers. The
business reported strong book-to-bill and backlog grew in all four
segments including in our tactical radio business."

"Earlier today we announced a definitive agreement to sell the CapRock
commercial business for $425 million in cash as part of our on-going
strategic initiative to optimize the business portfolio. Proceeds from
the transaction will be used to pay down debt and return cash to
shareholders. The transaction is expected to close in the first calendar
quarter of 2017."

Communication Systems

Communication Systems segment revenue in the first quarter was $431
million, down 5 percent compared to the prior year. Tactical
Communications revenue was $340 million, down 6 percent primarily due to
lower international SINCGARS radio sales. Public Safety revenue was $91
million, down 1 percent. Segment operating income was $119 million
compared with $138 million in the prior year, declining primarily as a
result of lower volume and mix.

Tactical radio orders in the quarter included $51 million from a country
in Eastern Europe, $35 million from a country in Latin America, and $15
million from a country in Southeast Asia. Harris also was awarded
several single-award IDIQ contracts, including a 5-year, $93 million
contract from U.S. Southern Command with initial orders of $26 million
to support counter-narcotic missions primarily in a number of Latin
American countries; a 4-month, $33 million bridge contract from the Army
and the Defense Logistics Agency; and a 3-year, $13 million competitive
contract from the Army to develop a narrowband mode of the Soldier Radio
Waveform (SRW), which will be required in all Army modernization radios,
including HMS, MNVR, and Small Airborne Networking Radio (SANR).

Harris achieved two notable milestones during the quarter, receiving
limited rate production authorization for the MNVR and NSA Certification
for Falcon III 117G radios to run the Mobile User Objective System
(MUOS) waveform, which provides connectivity to the Department of
Defenses next-generation MUOS satellite system.

Space and Intelligence Systems

Space and Intelligence Systems segment revenue in the first quarter was
$453 million, up 4 percent compared to the prior year, driven by higher
revenue from intelligence community customers and from the Radiation
Budget Instrument program that provides sensors for monitoring climate
change and global warming on NASAs Joint Polar Satellite System (JPSS).
Segment operating income was $80 million compared with $68 million in
the prior year, reflecting continued strong program performance and
higher pension income.

Following the close of the quarter, Harris received a 31/2-year, $90
million follow-on contract with an initial order of $39 million to
provide navigation payloads for the Air Forces ninth and tenth GPS III
satellites, and was selected for $53 million in follow-on work to
provide counter-communication capabilities and situational awareness to
support space asset protection, which will bring contracts to-date for
this mission to about $200 million.

Electronic Systems

Electronic Systems segment revenue in the first quarter was $361
million, down 3 percent compared to the prior year. Revenue was up 2
percent on an organic basis, excluding $19 million of prior-year revenue
attributable to the divested Aerostructures business. On an organic
basis, higher revenue from the recent integrated battle management
system win in the Middle East and from electronic warfare solutions was
partially offset by lower revenue from wireless products sales. Segment
operating income was $74 million compared with $69 million in the prior
year.

Harris was awarded a 2-year, $189 million contract from a country in the
Middle East to provide an integrated battle management system for the
countrys Armed Forces; a 3-year, $55 million contract from the Air
Force to redesign the electronic warfare system for the B-52 aircraft; a
$22 million contract from the Air Force for B-1B aircraft electronic
warfare self-protection subsystems; and $35 million in follow-on
contracts for the F-35 program.

Critical Networks

Critical Networks segment revenue in the first quarter was $527 million,
down 7 percent from the prior year. Higher revenue from FAA NextGen
modernization programs was more than offset by lower revenue in
CapRocks energy market and in IT services. Segment operating income was
$66 million compared with $63 million in the prior year.

Following the close of the quarter, Harris was awarded a 14-year (7-year
base, 7-year option), $700 million ceiling, single-award IDIQ contract
from Florida to provide a state-wide secure communications network. This
network, called MyFlorida Net-2, will have about 4,000 sites connecting
public safety, law enforcement, and other state and local government
agencies.

Guidance

Harris reiterated guidance for fiscal 2017 for GAAP net income in a
range of $5.53 to $5.73 per diluted share and for non-GAAP net income in
a range of $5.70 to $5.90 per diluted share, excluding
acquisition-related integration charges. Guidance for fiscal 2017
revenue is unchanged in a range of $7.11 billion to $7.33 billion.

Harris will host a conference call today, November 1, at 8:30 a.m.
Eastern Time (ET) to discuss its first quarter fiscal 2017 financial
results. The dial-in numbers for the teleconference are (877) 303-9481
(U.S.) and (760) 666-3582 (International), using participant code
4699208. Please allow at least 10 minutes before the scheduled start
time to connect to the teleconference. Participants are encouraged to
listen via live webcast and view managements supporting slide
presentation at https://www.harris.com/investors/financial-reports.
A recording of the call will be available on the Harris website
beginning at approximately 12 p.m. ET on November 1.

About Harris Corporation

Harris Corporation is a leading technology innovator, solving customers
toughest mission-critical challenges by providing solutions that
connect, inform and protect. Harris supports customers in more than 100
countries and has approximately $7.5 billion in annual revenue and
21,000 employees worldwide. The company is organized into four business
segments: Communication Systems, Space and Intelligence Systems,
Electronic Systems and Critical Networks. Learn more at harris.com.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures within the
meaning of Regulation G promulgated by the Securities and Exchange
Commission ("SEC"), including the percentage change in revenue for
Harris and the Electronic Systems segment on an organic basis, excluding
revenue in the first quarter of fiscal 2016 attributable to the
Aerostructures business divested in the fourth quarter of fiscal 2016;
net income and net income per diluted share for the first quarter of
fiscal 2017 and the first quarter of fiscal 2016, in each case excluding
acquisition-related charges; free cash flow in the first quarter of
fiscal 2017, excluding cash flow for net capital expenditures; and the
guidance range for expected income from continuing operations per
diluted share for fiscal 2017, excluding acquisition-related integration
charges. A "non-GAAP financial measure" is generally defined as a
numerical measure of a companys historical or future performance that
excludes or includes amounts, or is subject to adjustments, so as to be
different from the most directly comparable measure calculated and
presented in accordance with generally accepted accounting principles
("GAAP"). Harris management believes that these non-GAAP financial
measures, when considered together with the GAAP financial measures,
provide information that is useful to investors in understanding
period-over-period operating results separate and apart from items that
may, or could, have a disproportionately positive or negative impact on
results in any particular period. Harris management also believes that
these non-GAAP financial measures enhance the ability of investors to
analyze Harris business trends and to understand Harris performance. In
addition, Harris may utilize non-GAAP financial measures as guides in
forecasting, budgeting and long-term planning processes and to measure
operating performance for some management compensation purposes.
Non-GAAP financial measures should be considered in addition to, and not
as a substitute for, or superior to, financial measures presented in
accordance with GAAP.

Attachments: Financial
statements (7 tables)

Forward-Looking Statements

Statements in this press release that are not historical facts are
forward-looking statements that reflect managements current
expectations, assumptions and estimates of future performance and
economic conditions. Such statements are made in reliance on the safe
harbor provisions of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements in this release include but are not limited to: earnings and
revenue guidance for fiscal 2017; potential contract opportunities and
awards; the potential value of contract awards; anticipated satisfaction
of the closing conditions for the sale of the CapRock Communications
business, the anticipated timing of the closing of the sale of the
CapRock Communications business, the anticipated use of proceeds from
the sale of the CapRock Communications business; statements regarding
the on-going initiative to optimize the companys portfolio; and other
statements regarding outlook or that are not historical facts. The
company cautions investors that any forward-looking statements are
subject to risks and uncertainties that may cause actual results and
future trends to differ materially from those matters expressed in or
implied by such forward-looking statements. The companys consolidated
results, future trends and forward-looking statements could be affected
by many factors, risks and uncertainties, including but not limited to:
the loss of the companys relationship with the U.S. Government or a
change or reduction in U.S. Government funding; potential changes in
U.S. Government or customer priorities and requirements (including
potential deferrals of awards, terminations, reductions of expenditures,
changes to respond to the priorities of Congress and the Administration,
budgetary constraints, debt ceiling implications, sequestration and
cost-cutting initiatives); a security breach, through cyber attack or
otherwise, or other significant disruptions of the companys IT networks
and systems or those the company operates for customers; the level of
returns on defined benefit plan assets and changes in interest rates;
risks inherent with large long-term fixed-price contracts, particularly
the ability to contain cost overruns; changes in estimates used in
accounting for the companys programs; financial and government and
regulatory risks relating to international sales and operations; effects
of any non-compliance with laws; the continued effects of the general
weakness in the global economy and U.S. Governments budget deficits and
national debt and sequestration; the companys ability to continue to
develop new products that achieve market acceptance; the consequences of
uncertain economic conditions and future geo-political events; strategic
acquisitions and divestitures and the risks and uncertainties related
thereto, including the companys ability to manage and integrate
acquired businesses (including achieve estimated synergy savings and
realize other expected benefits), the actual amount and timing of
integration and other acquisition-related items and potential disruption
to relationships with employees, suppliers and customers, including the
U.S. Government, and to the companys business generally; performance of
the companys subcontractors and suppliers; potential claims related to
infringement of intellectual property rights or environmental
remediation or other contingencies, litigation and legal matters and the
ultimate outcome thereof; risks inherent in developing new and complex
technologies and/or that may not be covered adequately by insurance or
indemnity; changes in the companys effective tax rate; increased
indebtedness and significant unfunded pension liability and potential
downgrades in the companys credit ratings; unforeseen environmental
issues; natural disasters or other disruptions affecting the companys
operations; sustained weakness or volatility in oil or natural gas
prices or negative expectations about future prices or volatility;
changes in the regulatory framework that applies to, or of satellite
bandwidth constraints on, the companys managed satellite and
terrestrial communications solutions; changes in future business or
other market conditions that could cause business investments and/or
recorded goodwill or other long-term assets to become impaired; the
companys ability to attract and retain key employees, maintain
reasonable relationships with unionized employees and manage escalating
costs of providing employee health care; potential tax, indemnification
and other liabilities and exposures related to Exelis spin-off of
Vectrus, Inc. and Exelis spin-off from ITT Corporation; delays in, or
failures in respect of, anticipated satisfaction of closing conditions
or otherwise achieving the closing of the sale of the CapRock
Communications business or further portfolio optimization; or other
potential uses of proceeds from the sale of the CapRock Communications
business. Further information relating to these and other factors that
may impact the companys results, future trends and forward-looking
statements are disclosed in the companys filings with the SEC. The
forward-looking statements contained in this release are made as of the
date of this release, and the company disclaims any intention or
obligation, other than imposed by law, to update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise.

To supplement our condensed consolidated financial statements presented
in accordance with U.S. generally accepted accounting principles (GAAP),
we provide additional measures of net income and net income per diluted
common share and net cash provided by operating activities, adjusted to
exclude certain costs, charges, expenses and losses or other amounts.
Harris management believes that these non-GAAP financial measures, when
considered together with the GAAP financial measures, provide
information that is useful to investors in understanding
period-over-period operating results separate and apart from items that
may, or could, have a disproportionately positive or negative impact on
results in any particular period. Harris management also believes that
these non-GAAP financial measures enhance the ability of investors to
analyze Harris business trends and to understand Harris performance.
In addition, Harris may utilize non-GAAP financial measures as guides in
its forecasting, budgeting, and long-term planning processes and to
measure operating performance for some management compensation purposes.
Any analysis of non-GAAP financial measures should be used only in
conjunction with results presented in accordance with GAAP. A
reconciliation of these non-GAAP financial measures with the most
directly comparable financial measures calculated in accordance with
GAAP follows: